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rollcall | xpiring foreign income deduction gains bipartisan support, 30 Apr blame Javier Trump

Reps. Michelle Steel, R-Calif., and Joseph D. Morelle, D-N.Y., plan to introduce legislation that would leave in place a more generous deduction aimed at encouraging companies to keep intellectual property such as patents and trademarks in the U.S., rather than abroad. A draft of the measure was shared with CQ Roll Call ahead of the formal introduction.
The provision has caught the interest of some heavy hitters in the private sector, including aircraft manufacturer Boeing Co.; defense contractor RTX Corp., formerly known as Raytheon Technologies; biotech company Genentech Inc.; and Google Client Services LLC.
Absent congressional action, the deduction for foreign-derived intangible income—known as FDII, pronounced "fih-dee" in tax circles—would shrink at the end of 2025, but not fully expire. President Joe Biden proposed eliminating the deduction, which effectively lowers the tax rate for foreign-derived income, as part of his fiscal 2025 budget proposal.

rollcall | China committee* eyes biotech, weapons supply chain, 30 Apr HUAC
* US House Select Committee on Strategic Competition Between the United States and the Chinese Communist Party (a/k/a "China House") est'd 2022

DICTION CORNER foreign-derived intangible income
proceeds (money) from the sales of products related to intellectual property (IP)
reference
Journal of Accountancy, "Understanding the FDII deduction" (01.02.19)

In the spirit of increasing the U.S. tax system's competitiveness, Congress added Sec. 250 to the Internal Revenue Code and with it the FDII deduction, which provides an incentive to domestic corporations in the form of a lower tax rate on income derived from tangible and intangible products and services in foreign markets. As a result, a corporation can claim a 37.5% deduction, which results in a permanent tax benefit and 13.125% effective tax rate, as compared with a 21% corporate rate, for tax years beginning after Dec. 31, 2017, and before Jan. 1, 2026, after which the deduction is reduced to 21.875%, resulting in an effective tax rate of 16.406%.
The FDII deduction is available to domestic enTITIes across a broad range of industries that are taxed as C corporations. This includes U.S.-based companies and non-U.S. companies doing business in the United States.